It is possible for either a Claimant or a Defendant to place their opponent at risk of incurring costs and other financial penalties by making a formal offer to settle a claim, called a "Part 36 offer". A Part 36 offer to settle can be made at any time: before or after proceedings have commenced.
A Part 36 offer or payment will be calculated to take into account any anticipated reduction that may be made on account of contributory negligence, if any.
Under the Social Security (Recovery of Benefits) Act 1997, an insurer has a legal obligation to deduct from any compensation payment any State benefits received by a Claimant as a result of the injury. Any money deducted in this way is accounted to a Government department called the Compensation Recovery Unit. You will be informed of any sums deducted in this way.
A Part 36 offer or payment into Court is a tactical step. It is used as a means to pressurise the opponent into settling a claim early, rather than proceeding to a hearing. It is necessary for you to decide whether or not the Part 36 offer or payment is sufficient to compensate you for your injury and losses.
It is open to the Defendant or the Defendant's insurers to write a formal letter of offer to settle your entire claim, or part of it. The Part 36 offer of settlement is intended to place you at risk concerning your legal costs.
The letter must clearly state what money is being offered in respect of your claims and what sums, if any, have been deducted or discounted. You will be given 21 days to accept or reject the offer. If proceedings have started then the offer will only have effect if the money is also paid into Court. If proceedings have not commenced, then the Defendant must pay the amount offered into Court within 14 days of being served with your claim. If you then wish to accept the money in Court which has been previously offered then it may be necessary to obtain the Court's permission. The Court will take any pre action Part 36 offer into account when making a costs order.
If you decide that a Part 36 offer or Payment into Court is sufficient to compensate you and you accept the offer within 21 days that will create a binding agreement and finalise the claim. Then you will be entitled recover the majority of your costs (on the "standard basis") from the Defendant up to the date of your notice accepting the offer.
If you think that the Part 36 offer or Payment is insufficient and you do not accept it, then you can proceed with your claim to trial, if necessary. At the final hearing, the judge will not be told of the Part 36 offer and payment into Court, until after he or she has given judgment.
If the trial judge awards you more than the sum paid into Court, then the Part 36 payment into Court (and the earlier offer to settle, if made) will have no effect.
You will then be entitled to:-
- the higher award
- payment of your legal costs and fees from the Defendant up to the time of the judgment or award
in addition, the trial judge will probably award you:-
- a more generous method of assessing the amount of legal costs you are entitled to recover
- a more generous rate of interest on your damages, commencing from the last date that you could have accepted the offer or payment within the 21 day period
- a more generous rate of interest on your legal costs
If the trial judge awards you less or no more than the sum paid into Court, then you will only be entitled to:
- the lower award
- payment of your costs on the standard basis, at the discretion of the Court, up to the date that you could have served notice of acceptance of the letter of offer or payment into Court (whichever is earlier)
However, the Court will, unless it thinks it is unjust to do so, order you to pay the Defendant's costs thereafter. In a lengthy or complicated case, these could equal or even exceed the value of your award.
It is important that you should be aware that it is often the case that a significant proportion of your legal costs are incurred in the final preparations for trial and in attending the trial itself.
Where a payment into Court has not been accepted within the 21 day period, it is possible (although unusual) for a Defendant to apply to withdraw the payment into Court.
In difficult cases, it is sometimes helpful to seek the advice of a Barrister with experience of presenting personal injury claims at Court for an advice on quantum. We will advise you if we think this is necessary.
If you have the benefit of legal aid then you will still be at risk as to your costs following a Part 36 offer or payment. If you fail to beat the offer or payment then the Court can still order you to pay your opponent's legal costs and disbursements from your damages and if necessary from any contribution that you have made towards your Legal Aid. If you do not accept a Part 36 offer or payment then it is necessary to report this fact to the Legal Aid Board who will then review the merits of your claim and decide whether to continue to support your case.
If you have the benefit of Legal Aid and accept a Part 36 offer or payment, then the money will be held by this firm, subject to the Legal Aid Board's statutory charge. The Board are entitled to recover their outlay from any monies recovered or preserved as a result of the proceedings. This money, or a significant proportion of it, may have to be retained by this firm until your legal costs and disbursements have been recovered from the opponents.
If you have the benefit of a legal expenses insurance policy or are funded by a union it is also necessary to report the fact that a Part 36 offer or payment has been made, and again, they will then review the merits of continuing to financially support your claim.
If this firm is acting for you under a Conditional Fee Agreement, and you reject a Part 36 offer or payment on our advice and if the case proceeds to a hearing where you recover damages that are no more than the payment into Court, then the terms of the Law Society's recommended terms are that no success fee will be charged. This firm's costs will be limited to its basic costs, (your Conditional Fee Agreement may vary this) for work carried out after receipt of the Part 36 notice. If you decide to reject a Part 36 offer or payment against our advice then we have the right to end the Conditional Fee Agreement. You will then be responsible to pay this firm's basic costs and disbursements. You will only be responsible to pay this firm's success fee if you go on to win your case, unless your damages or settlement are at least 20% more than the offer that we advised you to accept.
Generally. We will tell you if and when your opponent makes a Part 36 offer or payment and we will give you our advice in order to help you decide whether to accept or to reject it. However, litigation is an uncertain business. It is rarely possible to predict to the exact amount of an award. Accordingly, the decision to accept or reject a Part 36 offer or payment must be made by you since the consequences of misjudging the offer or payment is likely to have a direct impact on you personally.